CONSTRUCTION

CLAIMS

Case Study B
Red Rose Business Centre

01/07/15

Details of the Project

Project Name

Red Rose Business Centre, Newtown.

Project Description

1. Pursuant to a Letter of Acceptance issued by Jason Leonard Developments and
accepted by Johnson Construction Group Ltd on 4 January 2011, a contract
agreement (hereinafter called the Contract) was entered into on 3 March 2011
between Jason Leonard Developments and Johnson Construction Group.

2. The project consists of a four-storey commercial building constructed from
brickwork and blockwork cavity walls, precast concrete floors and a flat roof.

3. The ground and first floors are divided up into various office spaces by a proprietary
partition system. As well as the partitions, the internal work consists of plastered
and painted walls, suspended ceilings, carpeting, mechanical, electrical, IT and
telephone services, so that the offices are left ready for occupation. Three partition
and suspended ceiling systems are named in the specification and after quotations
had been obtained by the Contractor via his subcontractor, the Engineer approved
the system manufactured by PAC Office Systems.

4. The office areas to the second and third floor are left with no finishings or services
for tenant fit-out. These floors however include fully fitted out communal lobbies
containing a lift, stairs, kitchens and toilets.

5. External works consist of a tarmac car park and hard and soft landscaping.

6. The Contractors scope includes design (to the extent specified in the Contract),
execution and completion of the Project in accordance with the Contract and with
the Engineer's instructions.

Names of the Parties to the Contract and the Consultants

1. The parties involved in the Contract are as follows:

a. The Employer Jason Leonard Developments.

b. The Contractor Johnson Construction Group Ltd.

c.

The Engineer Dawson-Wilkinson Partnership.

The Form of Contract

1. The Contract is the FIDIC, Conditions of Contract for Construction, for Building and
Engineering designed by the Employer, First Edition 1999, amended by the
Particular Conditions of the Contract.

2. From the Particular Conditions of Contract.

Sub-Clause 1.4 (Law and Language)

The Appendix to Tender states that the Contract shall be governed by the laws of
England and Wales.

Sub-Clause 13.8 (Adjustments of Changes in Cost)

Delete this clause entirely.

Sub-Clause 14.1 (The Contract Price)

Delete the Sub-Clause in its entirety and substitute with the following:

Unless otherwise stated in the Particular Conditions:

(a)

the Contract Price shall be the lump sum price inserted in the Appendix to
Tender and be subject to adjustments in accordance with the Contract;

(b)

the items and quantities given in the Bill of Quantities or any Schedules
are indicative only and shall not be considered as accurately representing
the work to be executed by the Contractor in performing the Works. The
quantities will not be re-measured and the lump sum Contract Price shall
be deemed to cover the whole of the Works as shown on the Drawings,
described in the Specification or otherwise required by the Contract and
whether or not included in the Bill of Quantities or any Schedules.
Notwithstanding the foregoing, any Provisional Sums stated in the Bill of
Quantities shall form part of the Contract Price and shall be adjusted in
accordance with Sub-Clause 13.5 [Provisional Sums].

The Contract Sum

The Contract sum as confirmed in the Letter of Acceptance is 9,999,999 on a lump sum
basis.

The Commencement Date

The Commencement Date was 24 February 2011.

The Time for Completion

The Completion Date is 23 February 2012.

Programme

The Contractor submitted a programme dated 24 February 2011, which was approved
by the Engineer on 13 April 2011. The programme is enclosed with this case study as
Appendix A.

Previous Extensions of the Time for Completion and Additional Payment

Johnson Construction Group has submitted no previous claims for extensions of the
Time for Completion or related additional payment.

The Event

1. The project had progressed well and your company was on target to hand over the
building on the Completion date. This is substantiated by monthly reports, the latest
which shows that the completion date is predicted to be 29 February 2012.

2. At a site meeting held on 4 January 2012, the Engineers Representative informed
the meeting that the developer had agreed a tenancy with a company for the whole
building, but that the tenant required the second and third floors to be fitted out to
the same specification as the ground and first floors and that this work would be
instructed to your company. The Engineers Representative advised that the
designers were currently working on the design and he anticipated being able to
issue drawings within the next week.

3. At this time the internal partitions to the ground and first floors, which were being
installed by a specialist subcontractor were almost finished, painting and decorating
was in progress, as was the second fix electrical works and IT and telephone
systems. With the exception of some ceramic tiling and decoration to the communal
lift lobbies, stairs, kitchens and toilets, which were in progress, the second and third
floors had been completed in accordance with the original requirement.

4. After the meeting, your construction manager contacted all the subcontractors and
advised you of the following:

a. The specialist partition subcontractor had informed the construction
manager that he anticipated that the partitions, doors and suspended
ceilings, which were sourced from the company that had previously been
approved, would be on a six-week delivery period and also that he was
aware that the factory had recently increased their prices by around
15%. This subcontractor is only a small company and your construction
manager advised you that the subcontractor would be fully committed
on other projects for the next six months and would not be able to carry
out the additional work.

b. In view of the above, the construction manager had already asked the
purchasing department to send enquiries out to other subcontractors,
based on the bills of quantities for the ground and first floors.

c.

The painting and decorating contractor, the MEP contractor and the floor
finishes contractor had advised the construction manager that they saw
no problems in carrying out the work to the second and third floors.

5. On 6 January 2012, your purchasing department issued enquiries to four
subcontractors for the supply and installation of the partitions and suspended
ceilings. The enquiry documents were based on the existing drawings and bills of
quantities for the Ground and 1st floors.

6. On 12 January 2012, the Engineer issued the drawings for the second and third floor
under cover of a drawing issue note, with the status Issued for Construction. The
drawings included office layouts to the 2nd and 3rd floors with similar layouts to the
Ground and 1st floor. The partitions and suspended ceilings were specified on the
drawings as the proprietary systems from PAC Office Systems that had already been
installed on the Ground and 1st floors. The communal lift lobbies, stairs, kitchens and
toilets to the 2nd and 3rd floors remained unchanged from the original design.

7. On 12 January 2012, the MEP contractor started the additional work on the 2nd floor.

8. On 13 January 2012, your purchasing department advised you that they had
received quotations from three partition subcontractors. All three were advising
that earliest delivery from PAC Office Systems was approximately 5 weeks from
receipt of the order and that the best quotation contained higher rates than those of
the the existing subcontractor. The purchasing department advised you that the
Project Manager had instructed them to immediately place the order with the most
competitive subcontractor.

9. On 15 January 2012, you sent a letter to the Engineer as follows:

We acknowledge receipt of the drawings for the fitting out to the 2nd and 3rd floors,
sent under cover of Drawing Issue Note No. RRBC-DWP-DIN-023 dated 12/01/12,
issued For Construction.

We consider this to be an instruction issued under Sub-Clause 3.3 (Instructions of
the Engineer) and that the instruction constitutes a Variation as defined under
Clause 13 (Variations and Adjustments). We consider that this will give us
entitlement to an extension or time and additional payment and we shall submit
our detailed claims in due course.

10. On 16 January 2012, a subcontract order was placed with Robinson Interiors for the
supply and installation of the partitions and suspended ceilings.

11. On 17 January 2012, Robinson Interiors placed the order for the partitions and
suspended ceilings with the manufacturer, PAC Office Systems.

12. On 18 January 2012, plastering was started work on the 2nd floor.

13. On 25 January 2012, Robinson Interiors forwarded a copy of PAC Office Systems
acknowledgement of order, which advised delivery of the first of the partitions
between 15 and 20 February 2012.

14. On 20 February 2012, the first delivery of partitions was received and site and
Robinson Interiors started installation.

15. 0n 19 March 2012, the first delivery of suspended ceilings was received on site.

16. Appendix A includes the baseline programme for the project dated 24 February
2011.